Some have criticized the often generous incentives public officials offer such as new roads, water lines, sewers and tax incentives to lure the businesses to their area. Usually the deals involve state and local officials offering incentives to private businesses and corporations, like to Toyota to build a new assembly plant.
Today in The Washington Post is a follow up story on Northrop Grumman’s press conference yesterday with Virginia Gov. Robert McDonnell announcing that this huge government contractor is relocating to Virginia, apparently to be close to their bosses – the Pentagon and numerous other agencies. Maryland, D.C. and Virginia vied vigorously for the company headquarters. They offered state and local taxpayer money to a federal government contractor whose money comes from federal taxpayers. Virginia won with more than $14 million in incentives.
I live in Virginia. Every community is cutting back expenses. Local libraries have trouble finding money to pay their utility bills. And in this case, it means I am paying twice: my state and federal taxes will go to Northrop Grumman.
Taxpayers were outraged when the head of General Motors and Chrysler flew into Washington on private jets to testify before Congress when they had received bailout money. According to The Washington Post, Northrop Grumman executives – also on the taxpayers’ dime – asked for and received from Virginia a discounted rate for space at a hangar at Dulles International Airport for Northrop’s corporate jets. Two jurisdictions in the negotiations said the government contractor also had asked the taxpayers to pay for their country club memberships and moving expenses. Northrop Grumman denied that.
Three hundred Northrop Grumman employees involved in the move earn an average of $200,000 a year. The company makes $25 billion with 44,000 workers in the D.C. area and 120,000 worldwide. It is larger than most federal agencies.
Around the same time and in the same area that U.S. Senators were questioning Goldman Sachs executives about their actions during the economic meltdown and Governor McDonnell was beaming at the Northrop Grumman press conference, Federal Reserve Chairman Ben Bernanke was testifying before the National Commission on Fiscal Responsibility and Reform. That is the group that is going to tell us who is going to pay for the huge federal debt. Bernanke’s statement said:
The aging of the U.S. population will also strain the Social Security program, as the number of individuals expected to be working and paying taxes into the system is rising more slowly than the number of people projected to be receiving benefits…The projected fiscal imbalances associated with the Social Security system…present an important challenge for policy.
Elsewhere in the budget, noninterest spending for programs outside of Medicare, Medicaid, and Social Security has comprised roughly half of total outlays over the past couple of decades. These expenditures support national defense and homeland security, education, transportation, and income-security programs, along with many other activities. The commission will have the difficult job of weighing the economic, social, and other benefits of these programs and comparing the implications of cuts in these areas against other means of closing the fiscal gap.
There are no good choices. We are going to have to raise taxes and cut federal programs. Everyone is going to have to make sacrifices. Always the country supports our soldiers in the field with whatever resources they need. But do we really need to pay for huge federal contractor’s country club fees and private jets? Should I have to pay for them twice?